Correlation Between Fine Metal and Kulthorn Kirby

Can any of the company-specific risk be diversified away by investing in both Fine Metal and Kulthorn Kirby at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fine Metal and Kulthorn Kirby into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fine Metal Technologies and Kulthorn Kirby Public, you can compare the effects of market volatilities on Fine Metal and Kulthorn Kirby and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fine Metal with a short position of Kulthorn Kirby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Metal and Kulthorn Kirby.

Diversification Opportunities for Fine Metal and Kulthorn Kirby

0.0

Correlation Coefficient

Fine Metal  Kulthorn Kirby

Pay attention - limited upside

The 3 months correlation between Fine and Kulthorn is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fine Metal Technologies and Kulthorn Kirby Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulthorn Kirby Public and Fine Metal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fine Metal Technologies are associated (or correlated) with Kulthorn Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulthorn Kirby Public has no effect on the direction of Fine Metal i.e., Fine Metal and Kulthorn Kirby go up and down completely randomly.

Pair Corralation between Fine Metal and Kulthorn Kirby

Assuming the 90 days trading horizon Fine Metal Technologies is expected to generate 0.99 times more return on investment than Kulthorn Kirby. However, Fine Metal Technologies is 1.01 times less risky than Kulthorn Kirby. It trades about 0.08 of its potential returns per unit of risk. Kulthorn Kirby Public is currently generating about 0.08 per unit of risk. If you would invest  3,650  in Fine Metal Technologies on September 15, 2024 and sell it today you would lose (350.00) from holding Fine Metal Technologies or give up 9.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fine Metal Technologies  vs.  Kulthorn Kirby Public

Fine Metal Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fine Metal Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fine Metal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kulthorn Kirby Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kulthorn Kirby Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Kulthorn Kirby is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Fine Metal and Kulthorn Kirby

The main advantage of trading using opposite Fine Metal and Kulthorn Kirby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Metal position performs unexpectedly, Kulthorn Kirby can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kulthorn Kirby will offset losses from the drop in Kulthorn Kirby's long position.

The idea behind Fine Metal Technologies and Kulthorn Kirby Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.